Technological Institute of the Philippines

FINANCIAL ANALYSIS
This is an outline of the economic considerations, which are necessary when preparing
an estimate of the capital investment or total product cost for a new venture or project.
Methods for obtaining predesign cost estimates has purposely been emphasized because
the latter are extremely important for determining the feasibility of proposed investment
and to compare alternative designs. The predesign estimates are based partially on
approximate percentages or factor that are applicable to a particular plant or process
under consideration.
USE OF COST INDEXES
A cost index is merely an index value for a given period point in time showing the cost at
that time relative to a certain base time. If the cost at some time in the past is known, the
equivalent cost at the present time can be determined by multiplying the original cost by
the ratio of the present index value to the index value applicable when the original cost
was obtained.
For the Manufacture of Ammonium Nitrate by Prilling Process fro m Ammonia and Nitric
acid, we used the Marshall and Swift Equipment Cost Indexes projected to 2013. We used
the projections cost index
Marshall and Swift Installed Equipment Indexes (Reference: Chemical Engineering
Plant Cost Index)
YEAR
2005
2006
2007
2008
2009
2010
2011
2012
2013

X is the number of years

since 2005
0
1
2
3
4
5
6
7
8

Y is the CEPCI
468.2
499.6
525.4
575.4
521.9
550.8
585.7
584.6
567.6

Technological Institute of the Philippines

By plotting the data above, we could get the cost index for the year 2015,

Using the Equation above

= 0.1211 6 + 2.051 5 11.509 4 + 22.461 3 6.5617 2 + 20.605
+ 468.76
Where:
X=3
= 0.1211(3)6 + 2.051(3)5 11.509(3)4 + 22.461(3)3 6.5617(3)2
+ 20.605(3) + 468.76
= . ( )
= .

Exchange Rate (Source: www.bsp.gov.ph)

Unite States Dollar (USD)

Philippine Peso (Php)

$1

Php 46.831
As of October 1, 2015

Technological Institute of the Philippines

Cost Estimation
Estimation of Capital Investment
Plant Capacity:10000 kg/day
Plant Operation: 300 days/year at 8 hours/day
TOTAL COST OF PURCHASED EQUIPMENT
No. of
Equipment
Total Cost
Equipment
Silo
1
374,648.00
Neutralizer
1
1,986,439.89
Vibrating Screen
1
448,547.32
Prill Tower
1
46,350,500.00
Dryer
1
2,056,872.78
Mixer
1
140,498.00
Flash Drum Evaporator
1
1,030,282.00
Evaporator
1
38,624,589.38
Shell and Tube Heat Exchanger (V-001)
1
573,283.56
Shell and Tube Heat Exchanger (HEX-001)
1
103,480.39
Shell and Tube Heat Exchanger (HEX-002)
1
628,634.99
Shell and Tube Heat Exchanger (HEX-006)
1
137,636.31
Double Pipe Heat Exchanger (HEX-003)
1
535,319.07
Double Pipe Heat Exchanger (HEX-004)
1
257,991.98
Double Pipe Heat Exchanger (HEX-005)
1
257,991.98
Rotary Cooler
1
468,310.00
Screw Conveyor
4
515,141.00
Total Purchase Equipment Cost w/ Delivery Cost

94,490,166.65

Unit
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP
PhP

Technological Institute of the Philippines

Cost of Equipment
* Using the McGraw Hill Online Cost Estimator
1. SILO
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 374,648.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 374,648.00 (
)
395.6
= , .
2. NEUTRALIZER
Heat transfer area: m2
Materials of Construction: Carbon Steel
Cost2002: PhP 1,986,439.89
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 1,986,439.89 (
)
395.6
= , , .
3. VIBRATING SCREEN
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 448,547.32
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 448,547.32 (
)
395.6
= , .
4. PRILL TOWER
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 46,350,500.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 46,350,500.00 (
)
395.6
= , , .

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5. DRYER
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 2,056,872.78
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 2,056,872.78 (
)
395.6
= , , .
6. MIXER
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 140,498.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 140,498.00 (
)
395.6
= , .
7. FLASH DRUM EVAPORATOR
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 1,030,282.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 1,030,282.00 (
)
395.6
= , , .
8. EVAPORATOR
Heat transfer area: 40.93 m2
Materials of Construction: Carbon Steel & Stainless Steel
Cost2002: PhP 38,624,589.38
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 38,624,589.38 (
)
395.6
= .

Technological Institute of the Philippines

9. SHELL AND TUBE HEAT EXCHANGER (V-001)

Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 573,283.56
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 573,283.56 (
)
395.6
= , .
10. SHELL AND TUBE HEAT EXCHANGER (HEX-001)
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 103,480.39
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 103,480.39 (
)
395.6
= , .
11. SHELL AND TUBE HEAT EXCHANGER (HEX-002)
Heat transfer area: 3.8704 m2
Materials of Construction: 304 Stainless Steel
Cost2002: PhP 628,634.99
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 628,634.99 (
)
395.6
= , .
12. SHELL AND TUBE HEAT EXCHANGER (HEX-006)
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 137,636.31
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 137,636.31 (
)
395.6
= , .

Technological Institute of the Philippines

13. DOUBLE PIPE HEAT EXCHANGER (HEX-003)

Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 535,319.07
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 535,319.07 (
)
395.6
= , .
14. DOUBLE PIPE HEAT EXCHANGER (HEX-004)
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 257,991.98
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 257,991.98 (
)
395.6
= , .
15. DOUBLE PIPE HEAT EXCHANGER (HEX-005)
Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 257,991.98
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 257,991.98 (
)
395.6
= , .
16. ROTARY COOLER
Heat transfer area: 2.66 m2
Materials of Construction:
Cost2002: PhP 468,319.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 468,319.00 (
)
395.6
= , .

Technological Institute of the Philippines

17. SCREW CONVEYOR (4 UNITS)

Heat transfer area: m2
Materials of Construction:
Cost2002: PhP 515,141.00
Solving for Cost2015
cost index at 2015
Cost 2015 = Cost 2002 (
)
cost index at 2002
555.85
Cost 2015 = 515,141.00 (
)
395.6
= , .
It is assumed that delivery charges are 5% of the purchased price.
= 132,766,338.7

= 132,766,338.7 + (0.05 132,766,338.7)
( )
= , , .

Technological Institute of the Philippines

Instrumentation and Control Cost

The scope of the instrumentation and control cost comprises the purchase and
installation labor cost of auxillary machines, such as pre ssure and temperature gauges
or flow controller, used to control equipment.
Total Instrumentation Cost (Alibaba.com)
Name of Instrumentation
No. of
Price per unit,
Units
Php
Ball Valve
10
Check Valve
3
Conveyor Speeder
15
Flow Controller
3
Flow Transmitter
3
Level Transmitter
10
Orifice
3
Pump
3
Speed Controller
15
Summation controller
3
Temperature transmitter
2
Transducer
16
Weight Controller
10
Weight Transmitter
14
Total

Total Price, Php

6,024,000.00

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I.DIRECT COSTS
Installation Cost
The scope of the installation cost of the equipment comprises the cost of foundation
support platforms, labor cost, construction related expense, and other factors related to
the erection of the purchased equipment.
Basis: for a solid processing plant, 45% of the delivered equipment cost is the amount of
the purchased equipment installed.

= 0.45 ( )
= 0.45 139,404,655.60
= , , .
Piping and Conveyor Installation
The scope of the piping and conveyor installation comprises the labor cost of installation,
cost of pipes, valves, fittings and all other piping and conveyor requirements.
Basis: 31% of the cost of purchased equipment delivered is the piping and conveyor cost
installation.

= 0.16 ( )
= 0.31 139,404,655.60
= , , .
Electrical Systems
The scope of the electrical system cost comprises the power, wiring, lightning,
transformation, service and instrumentation and control wiring.
Basis: 10% of the delivered equipment cost is the installed electrical system cost.

= 0.10 ( )
= 0.10 139,404,655.60
= , , .

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Yard Improvement
The scope of the yard improvement comprises the roads, grading,fencing, sidewalks,
railroads, sidings, landscaping, and any other similar items related to yard improvements.
Basis: for a solid processing plant, 15% of the delivered equipment cost is the yard
improvement cost.
= 0.15 ( )
= 0.15 139,404,655.60
= , , .

Service Facilities
The scope of service facilities comprises the utilities for supplying steam, water, power,
and fuel for the chemical processes and operations. Fire protection, waste disposal and
miscellaneous service items such as shops, clinics or first aid quarters, and cafeterias
require capital investment that are included under general heading of service facilities.
Basis: For a solid processing plant, the 40% of the delivered equipment cost is the service
facility cost.

= 0.40 ( )
= 0.40 139,404,655.60
= .
Total Direct Plant Cost:
= .

INDIRECT COSTS

Engineering and Supervision

Technological Institute of the Philippines

The scope of the engineering and supervision comprises the internal or licensed
software, computer-aided drafts, purchasing, accounting, travel, and the plant
supervisory services.
Basis: for a solid processing plant, 33% of the delivered equipment cost is the
engineering and supervision cost.

= 0.33 ( )
= 0.33 119,452,840.3
= .
Construction Expenses
The scope of the construction expenses comprises the cost construction labor and
other construction related expenses such as the construction tools and rentals,
construction payroll, construction tariffs, insurance and permits, miscellaneous
equipment installation and other fees related to the construction process.
Basis: for solid processing plant, 39% of the delivered equipment cost is the
construction expenses
= 0.39 ( )
= 0.39 119,452,840.3
= .
Legal Expenses
The scope of legal expenses comprises the costs related to the processing of land
purchase, equipment purchase, and contracts of construction. Understanding and
proving compliance to government requirements, such as environmental and safety
measures requirements constitute major sources of legal cost.
Basis: for solid processing equipment, 4% of the delivered equipment cost is the legal
expenses.
= 0.04 ( )
= 0.04 119,452,840.3

= .
Contractors Fee

Technological Institute of the Philippines

The scope of the contractors fee includes the payment given to the c onstruction
company hired for the construction of the plant.
Basis: for solid processing equipment, 17% of the delivered equipment cost is the
contractors fee.
= 0.17 ( )
= 0.17 119,452,840.3
= .

Contingency
The scope of the contingency comprises the estimation of the project cost in
recognition of the fact that unexpected events and expenses that inevitably increase
the cost of the project might arise during the erection of the plant. Inevitable events
such as storm, flood, transportation accidents, strikes, price changes, errors of the
estimation, and unforeseen expenses may occur.
Basis: 37% of the purchase equipment delivered is the contingency.
= 0.37( )
= 0.37 119,452,840.3

= .
Total Indirect Plant Cost:
=

RAW MATERIALS
Anyhdrous Liquid Ammonia
= (2528.45

1
43.51

) 2400
= , , .
24

Nitric Acid (55 % solution)

= (13629.32
Dolomite

1
5.50

) 2400
= ,,
24

Technological Institute of the Philippines

= (431.1092

1
2.07

) 2400
= , .
24

Total Raw Materials Cost = 18,586,651.55

= +
= 174452504.8 + 155288784
= .
= +
= 329741288.8 +18,586,651.55
= .